The AAFA believes the US Government ending Section 301 tariffs on basic consumer goods like apparel and shoes could be a quick-fire solution for tackling rising US inflation levels, however apparel industry consultant Robert Antoshak predicts the US Federal Reserve will opt to raise interest rates.
The data released by the US Census Bureau yesterday (13 July) shows the all items index increased 9.1% for the 12 months ending June, which is the largest 12-month increase since the period ending November 1981. It was a similar story for the apparel index, which increased 5.2% on a 12-month basis and has experienced increases on a monthly basis with a rise of 0.8% in June, following a 0.7% increase in May.
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By GlobalDataThe AAFA notes that all apparel and footwear numbers are up versus June 2021, particularly infant and toddlers apparel (10.0%), men’s apparel (8.1%), juvenile footwear (6.7%), and women’s footwear (6.0%). Plus, footwear across the board is up versus 2019, led by juvenile footwear (9.9%), men’s footwear (9.6%), and women’s footwear (5.2%).
The AAFA’s president and CEO Steve Lamar explains: “Tariff-fuelled inflation continues to damage our economy by raising prices and dampening consumer sentiment. President Biden can stop this vicious cycle by deploying one obvious tool that he has so far not used – cancelling Section 301 tariffs on basic consumer goods like clothes, shoes, and backpacks.”
He points out this action could be taken immediately, and it would also effectively target an aggressive supply chain cost that is regressively impacting lower income Americans.
Antoshak makes the point that inflation has taken hold in most major products and services in the economy. He says: “And it’s more than just food and fuel,” adding that prices for all goods and services excluding volatile food and fuel stood at an annualised rate of 5.9 percent.
He believes all of this “virtually guarantees the Federal Reserve will raise interest rates this month in an effort to tame inflation”.
However, he highlights: “By doing so, the likelihood of a recession will become more probable, as consumers and businesses pull back on purchasing due to rising prices and higher costs for borrowing money.”
